Transcendental Success

The four profiles, all represented by people that I know.  Spenders are all over them map; happy sometimes and devastated others. They drive the world but they don’t know it. Savers think they’re shareholders (my S-sword for investor) but real investors look down on them. Shareholders don’t like speculators; to them speculators are gamblers who ruin it for the real players, the committed and honest investor. Speculators think there’s a place for everyone. They’re a calming force in a turbulent market, though they don’t care about that. Shareholders and speculators both think saving is not a synonym for what they themselves do.

I want to explore the minds of each type of person. These categories describe what people do with money, not how they make their money.
Part 1: Spenders

Spending is the same as consuming. Everyone spends, but a spender is someone who does nothing with their money but spend.

We all start off as spenders. Little kids, allowances in hand, shaking with excitement at the prospect of the candy we can buy. Children seem so angelic in their innocence about the costs of things or the efforts to get them. Price tags are arbitrary numbers. My kid asks me in the morning if we’ll buy him a toy stegosaurus and in the afternoon, with the same sincerity, if we can get a new car.

As we grow out of this kids stage most of us change:

• We are aware that we may still be alive tomorrow.
• We feel the efforts behind consumption, behind earning the money.
• We feel the fear of keeping no reserve and exposing ourselves to the most minor of calamities.
• We understand that spending our entire paycheque keeps us small. By accumulating we can do larger things.

Soon most people automatically lose the desire to spend every dime. For those that don’t I believe that there are three reasons for it, or three pofiles:

1. The Poor Spender: They simply can’t afford it. Although most of us can easily shrink our lifestyles to fit within our incomes, there are some for whom this is truly impossible. It is hard to think that there are many undeniable cases like this given the plentiful stories of immigrants unable to speak the language with $5 in hand wrestling a prosperous life out of society. For those reading this blog, I doubt that’s a problem.  Most people who think they fall in this category should compare themselves to the really poor people.  When I compare myself to my investment banker friend who makes 300K+ per year, I look plenty poor, but I know I’m plenty rich enough to have some money left over.
2. The Religious Spender. Spending everything you earn has a certain seductive philosophy to it. Spenders live in the moment, and they therefore really live. They work only to earn what they need now. I know many people like this, mostly young people. The ski bums who hitch a ride to the mountain to ski and party, paid for by giving lessons or working in bars. The travellers who take a flight to anywhere, find a little job, play for a few weeks or months, then take another flight to somewhere else.This class of spender is one who owns little. They find their delights from experiences, not things.I personally have not done this but I can imagine myself doing it, or more correctly I wish I would do it. How free I could be. Free of large possessions, free of obligation or service to bosses and lenders. It could be a good life!
3. The Feeble Spender: Many people I know are totally controlled, consumed from the inside by their desires. If they see something they like then they buy it. Willpower doesn’t exist for them. Waiting doesn’t exist.I knew a guy in his 40s, who worked with me at McDonald’s when I was in high school. He bought a new VCR or TV maybe 4 or 5 times per year! There was always something new coming out. 4 heads, auto-tracking, better sound, whatever. This guy was poor, making McDonald’s wages and renting a tiny apartment. I was completely shocked, even at that time, by this person’s helplessness to decide that he had enough VCRs and that he should use the $300 or so dollars for something else. He bought the next one before he finished paying off the previous!We can hope that they are happy in the moment because of the enjoyment brought by consumption. The spender lives a life that’s more fun, eats better, takes better vacations, is better dressed, parties more — for a while.

 The spender profiles have certain problems:

1. Spenders never grow: Since spenders blow cash out the door as fast as it comes in, they can never undertake a project larger than the quantum bundles of money they earn. The Religious Spender doesn’t really care about this, but the others probably do. That guy with the VCRs and TVs, he’s probably still buying TVs because that’s what he can afford.
2. Spenders take huge risks: Since spenders leave nothing in reserve and their outflow equals their inflow, any hiccup in the income is felt immediately by their lifestyle. A job loss means that they need to get a new job before the food in their fridge is gone.  A robbery, and accident, health problems; these are all devastating to someone who has no buffers.
3. Spenders in North America can Sell Their Futures: Anyone can get credit, which gives spenders a way to get in on some of the bigger fun. They can borrow to buy cars, furniture, vacations, anything. This enslaves The Feeble Spender because it gets right at their Achilles’ Heal, their inability to walk away from shiny things.  Unfortunately this makes their already risky situation even worse because now not only do they have no reserves, but more of their income is spoken for before it’s even earned!

In the end we are all spenders to some degree, but the pure spender has few redeeming qualities. Spenders, however, are necessary. Consumption is what drives the economy, and what makes the other “more sophisticated” money profiles possible. Every other use of money, excepting perhaps the government, eventually makes its way back into a consumer product or service; something shiny or tasty or fun that a spender will buy. For those who aren’t spenders, that means opportunity to transfer wealth from the spender.

Stay tuned for a survey of the other three profiles.